Small tax revolution in sight in the country of billionaires and inequalities? The US administration proposes, in its draft 2023 budget, presented on Monday March 28, the creation of a “minimum tax on the income of billionaires” 20% for all households with more than $100 million in wealth. “This new minimum tax will eliminate the possibility for the “unrealized” income (1) of very wealthy households not to be taxed for decades or generations”, explains the White House in a document.
Tax unrealized capital gains
This is indeed one of the specificities of many large American fortunes: realized through stock market capital gains, these are not subject to income tax, taxation only intervening at the time of the sale of the asset. In the United States, there is no estate tax. On the other hand, there are many opportunities to escape inheritance tax and a tax rate on capital gains much lower (23.8%) than that which weighs on income (40.8%). As a result, large fortunes largely escape tax, with an average rate for the 400 largest among them estimated at around 8.2%, according to the administration.
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With this new tax, the objective is to ensure that the richest 0.01% pay at least 20% tax on all their income, including unrealized capital gains, that is i.e. on increases in the value of their portfolio.
A 50 billion reform for Elon Musk
In concrete terms, only multi-millionaires who do not already pay 20% tax on their income will be affected. Last October, Berkeley-based French economist Gabriel Zucman estimated that such a tax could cost Tesla boss Elon Musk $50 billion over five years and Tesla founder Jeff Bezos $45 billion. Amazon.
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However, to be applied, this measure will have to obtain the approval of the American Congress, in which Joe Biden has a very small majority. In October, Democratic senators had already tried to have an equivalent mechanism adopted, with the aim of financing the American president’s vast 3,500 billion programs, including the famous “Build Back Better”. But the proposal had been challenged, including by some Democratic senators, including the very influential Joe Manchin.
Bring pledges left
“With this measure, Joe Biden’s objective is no longer to balance his program on a budget, but to provide pledges to the left, when he failed to have his major social reform and infrastructure project adopted. climate”, analyzes Anton Brender, the specialist in the United States and member of the circle of economists. According to observers, the adoption of the US federal budget could also be an opportunity to relaunch discussions on the subject.
Beyond the political quarrels, American society seems to have tilted in recent years in favor of higher taxation of the richest. In 2021, a poll showed 81% of Democrats and 57% of Republicans in favor of a wealth tax. As for the super-rich, many of them, like Bill Gates or Warren Buffett, plead for an increase in the taxation of ” more lucky “ to better distribute wealth.